ETFs grow in popularity and complexity in EU

Eurozone ETF survey

EDHEC-Risk Institute has announced the results of the EDHEC European ETF Survey 2013, a comprehensive survey of 207 European ETF investors. The survey was conducted as part of the Amundi ETF & Indexing research chair at EDHEC-Risk Institute on “Core-Satellite and ETF Investment.”

Among the key findings of the 2013 survey:

Satisfaction has remained at high levels across most asset classes. There have been increases in satisfaction for corporate bond, commodity, real estate and sector ETFs, but satisfaction rates for ETFs based on the most liquid ETF asset classes are far more consistent compared to those based on illiquid asset classes.

More than a quarter (28%) of respondents already use products tracking “smart beta” indexes and more than an additional one-third of respondents (36%) are considering investing in such products in the near future.

Despite the past growth and increasing maturity of the ETF market, ETF investors are still looking to increase or at least to maintain their use of ETFs and have a more favourable outlook for their use of ETFs than for their use of alternative indexing products.

There is increasing interest among investors for development of ETFs based on alternative forms of indexes, with 39% of investors interested in further development in ETFs based on smart beta indices.

The data shows that respondents are still overwhelmingly in favour of passive, rather than active, ETFs.

TER, underlying index and bid/offer spreads are the three most important criteria when selecting an ETF.

73% of investors agree that the ESMA ETF Guidelines have improved investor protection.

Commenting on the results of the survey, Valérie Baudson, Global Head of ETF & Indexing, Amundi, said, “I note with pleasure that, year after year, investors’ satisfaction with ETFs remain very high and the positive outlook for their future use continues to rise. Interestingly, the latest EDHEC-Risk European ETF survey also shows an increasing interest in the development of ETFs based on alternative forms of indices. Innovation, liquidity and cost efficiency, which are the core principles of Amundi ETF, will remain as drivers of this growing market.”

Professor Noël Amenc, Director of EDHEC-Risk Institute, added, “It is particularly noteworthy this year to observe that a considerable majority of investors consider that the new European regulatory guidelines drawn up by ESMA have improved investor protection for ETF investors. This is an encouraging sign for EDHEC-Risk Institute, because we believe that these guidelines would be usefully deployed by both national and international regulators.”

Since 2001, EDHEC Business School has been pursuing an ambitious policy in terms of international research. This policy, known as “Research for Business”, aims to make EDHEC an academic institution of reference for the industry in a small number of areas in which the school has reached critical mass in terms of expertise and research results. Among these areas, asset and risk management have occupied privileged positions, leading to the creation in 2001 of a major research facility: EDHEC-Risk Institute. This institute now boasts a team of over 95 permanent professors, engineers and support staff, as well as 48 research associates from the financial industry and affiliate professors.